Ford workers approve UAW contract changes

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DETROIT – Unionized workers at Ford Motor Co. have approved contract changes that include freezing wages and cutting benefits in a move aimed at helping the automaker remain competitive. The United Auto Workers said Monday a majority of hourly workers voted in favor of modifications to the 2007 contract with Ford, eliminating cost-of-living increases and cash bonuses.

The agreement is expected to be a model for Chrysler LLC and General Motors Corp., which need to bring their labor costs in line with those of foreign auto companies' plants in the U.S. as a condition for the $17.4 billion they have received in federal loans so far. Under terms of their loan agreements, progress must be made by March 31. The companies are seeking an additional $21.6 billion in government aid.

Dearborn, Mich.-based Ford, which has not sought government funding as its rivals have, is the first U.S. automaker to come to an agreement with the union. The company said that it did not want to be at a disadvantage should its competitors negotiate lower labor costs with the UAW.

The UAW pact also allows Ford to use company stock to make payments to a union-run health care trust, called voluntary employee beneficiary associations, or VEBAs. Ford can use stock to pay up to 50 percent of its payments, which would pay retiree health care benefits. Ford owes $6.3 billion to its VEBA at the end of this year.

Chrysler, however, may not be able to match Ford's guarantee of issuing additional shares for the trust if Ford's share price drops, according to a person briefed on Chrysler's negotiations. The person asked not to be identified because the talks are private.

Chrysler is a privately held company and would have to grant partial ownership to the union, since there are no public shares of the company. Chrysler must pay around $9.9 billion to its trust at the end of the year, while GM has to pay about $20 billion.

The UAW said 59 percent of Ford's production workers and 58 percent of skilled-trades workers voted for the concessions. At least two local unions rejected the measures.

"By working together with our UAW partners, we identified solutions that will help Ford reach competitive parity with foreign-owned auto manufacturers and that are important to our efforts to operate through the current economic environment without accessing a bridge loan from the U.S. government," said UAW President Ron Gettelfinger in a written statement.

Base wages for UAW workers will remain the same, but the deal limits supplemental pay that laid-off workers receive while they collect unemployment benefits. The ratified deal also ends the controversial jobs bank program that let workers collect most of their pay from the company when laid-off.

"Now the pressure is on to get a similar agreement at GM and Chrysler. Time is running out," said Aaron Bragman, an auto analyst with the consulting company IHS Global Insight in Troy, Mich. "It's ironic that Ford was able to accomplish it, being the one that doesn't have an agreement with the government."

Shares of Ford rose 4 cents, or 2.4 percent, to close at $1.74 in the regular session. After hours, the stock gained 6 cents, or 3.5 percent, to $1.80.

"By working together with our UAW partners, we identified solutions that will help Ford reach competitive parity with foreign-owned auto manufacturers and that are important to our efforts to operate through the current economic environment without accessing a bridge loan from the U.S. government," said Joe Hinrichs, Ford's group vice president of global manufacturing and labor affairs, in a written statement.